World economy needs US-China cooperation: Biden

BEIJING (AFP) – US Vice President Joe Biden, starting a visit to China under a cloud of criticism over the US debt crisis, told his hosts Thursday that the two nations held the key to global economic stability.

Biden, 68, needs to mend America’s worsening image in China after the world’s largest economy came close to a disastrous default on its debts earlier this month and suffered a historic credit rating downgrade.

China is the biggest foreign holder of US debt and the country’s state-run media have delivered a barrage of criticism of Washington’s handling of the debt crisis, which they have described as a “ticking time bomb”.

“I am absolutely confident that the economic stability of the world rests in no small part on cooperation between the United States and China,” Biden told his counterpart Xi Jinping, who is set to succeed President Hu Jintao in 2013.

“It affects every country from your neighbour to the north, to Argentina in the southern tip of South America. It is the key, in my view, to global economic stability.”

Biden attended a welcoming ceremony at Beijing’s Great Hall of the People before holding talks with Xi, his official host in China.

The trip is aimed partly at building ties with the likely next leader of the world’s second-biggest economy, who remains virtually unknown in US policy circles.

Senior officials travelling with Biden, who declined to be named, told reporters that Xi had expressed confidence in the recovery of the US economy, and that the two had also discussed North Korea and trade issues.

Chinese media had said weapons sales to Taiwan — which Beijing sees as part of its territory — would be a top item on the agenda for the visit.

The official China Daily said US arms sales to the island were the “biggest source of disagreement between Washington and Beijing”.

“Any mis-step in dealing with the issue of arms sales to Taiwan may disrupt the improving relationship between the two powers,” the paper said in an editorial.

The United States is expected to decide by October whether to sell Taipei F-16 fighter jets, a step promoted by US lawmakers but strongly opposed by Beijing.

US officials said Biden had “reiterated US determination to maintain peace and stability across the Taiwan straits,” but they refused to further elaborate.

President Barack Obama’s deputy also met China’s parliamentary chief Wu Bangguo, and will hold talks with Hu and Premier Wen Jiabao on Friday before travelling to the southwestern boomtown of Chengdu.

“As the world economy’s circumstances are uneasy, as the two largest economies in the world, we hold the key to creating growth and jobs worldwide,” Biden told Wu.

“That’s the overwhelming reason I’ve come — to talk about jobs and growth worldwide… To discuss the reordering of our economies — yours and ours.”

Biden’s trip comes amid growing concern about China’s human rights record in the United States, which this week appealed to Beijing to free prominent rights lawyer Gao Zhisheng. US officials said he had raised the issue with Xi.

Gao, who defended some of China’s most vulnerable people including Christians and coal miners, was placed under house arrest in 2006 and has not been heard of since last year.

But the main focus of the China visit — Biden’s first as vice president — will likely be on Beijing’s concerns over the safety of its US investments.

China, which held around $1.17 trillion in US Treasury bonds at the end of June, watched nervously as a political impasse brought Washington close to default this month and Standard & Poor’s downgraded the US credit rating.

Biden is also expected to suggest that China should focus on its own economic reforms, such as letting its currency appreciate and shifting from a reliance on exports to an economy based on consumption.

His trip will also include some more relaxed moments — after meeting Xi, Biden had lunch with his daughter-in-law and granddaughter at a small family-owned restaurant in Beijing that specialises in intestines.

The vice president and his entourage baulked at ordering the house speciality, opting instead for noodles and pork buns.